Bank of America: Bonds are truly attractive for the first time in decades, and U.S. stocks may underperform U.S. Treasuries over the next decade.

BlockBeats news, October 7th - Savita Subramanian, head of US equity and quantitative strategy at Bank of America, stated that for the first time in decades, bonds have truly become a competitive alternative asset to the stock market. She also warned that investor sentiment is currently at high levels, which means the stock market is more vulnerable to negative surprises, and the room for further upside beyond expectations is relatively limited.

Subramanian stated that the yield on the US 10-year Treasury has now exceeded 5%, while Bank of America's own valuation model suggests that the annualized return of the S&P 500 index over the next 10 years may not reach this level. Subramanian pointed out that US policymakers are working to avoid long-term interest rates rising too high. Both the Federal Reserve and the US Treasury Secretary are closely monitoring changes at the long end of the yield curve.

At the same time, demographic changes also mean that the ceiling for US interest rates may be lower than the levels of the 1970s and 1980s. Additionally, artificial intelligence may bring certain deflationary effects in the future, thereby alleviating long-term inflation and interest rate pressures. Against this backdrop, Subramanian believes that the allocation environment for bonds is becoming more favorable, as US Treasury yields may find it difficult to sustainably rise above 6% to 7%.